What an immediate annuity is
An immediate annuity is a deal with an insurer: you hand over a lump sum, and starting almost right away they send you a fixed monthly check — either for a set number of years or for the rest of your life. It's the simplest way to turn savings into a paycheck you can't outlive.
What decides your monthly payment
Three things drive the number: how much you put in, how long the payments last, and the interest rate the insurer assumes. A bigger deposit and a shorter payout both mean larger checks; a longer or lifetime payout spreads the same money thinner. The calculator above shows the trade-off for any amount.
Term-certain vs lifetime
A term-certain annuity pays for a fixed number of years — higher checks, but they stop when the term ends. A lifetime annuity pays until you die, protecting you from outliving your money but paying a bit less per month. Many people split the difference with a life-with-period-certain option.
Is it worth it?
An immediate annuity trades flexibility for certainty: the money is gone once you buy, but the check is fixed and you never worry about the market. Compare the guaranteed income here against what the same lump sum might earn invested — the annuity vs lump sum calculator and how long will savings last calculator show both sides.
Common questions
When do payments start? Usually within a month of buying — that's the immediate part, versus a deferred annuity that grows first.
Are the payments taxed? Part of each is your own money back (untaxed) and part is interest (taxed). From a pre-tax account, the whole payment is taxable.
What if I die early? With a plain lifetime annuity, payments stop — a period-certain or refund option protects your heirs for a slightly lower payment.